[Federal Register Volume 62, Number 216 (Friday, November 7, 1997)]
[Proposed Rules]
[Pages 60195-60196]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29467]


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DEPARTMENT OF TRANSPORTATION

Office of the Secretary

14 CFR Part 255

[Dockets Nos. OST-97-3014 and OST-97-2881]


Computer Reservations System (CRS) Regulations

AGENCY: Office of the Secretary, (DOT).

ACTION: Request for comments, petition for rulemaking on rules 
governing computer reservations systems.

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SUMMARY: The Department is inviting interested persons to comment on a 
petition for rulemaking filed by American West Airlines that requests 
two new rules governing computer reservations systems (CRSs). America 
West asks the Department to amend its CRS rules (14 CFR Part 255) to 
include a prohibition against certain CRS practices that allegedly 
impose higher booking fee costs on airlines and enable travels agents 
to make transactions that damage an airline's ability to control its 
inventory. The Department invites persons wishing to comment on America 
West's proposal to include those comments in their responses to the 
Department's advance notice of proposed rulemaking in Docket OST-97-
2881.

DATES: Comments and reply comments must be submitted on or before 
December 9, 1997, and January 23, 1998, respectively, the due dates for 
comments and reply comments in Docket No. OST-97-2881.

ADDRESSES: Comments must be filed in Room PL401, Docket OST-97-2881, 
U.S. Department of Transportation, 400 7th St., SW., Washington, DC 
20590. Late filed comments will be considered to the extent possible. 
To facilitate consideration of comments, each commenter should file six 
copies of its comments. The comments should state that they are filed 
in Docket OST-97-2881.

FOR FURTHER INFORMATION CONTACT:
Thomas Ray, Office of the General Counsel, 400 Seventh St., SW., 
Washington, DC 20590, (202) 366-4731.

SUPPLEMENTARY INFORMATION: The Department adopted its regulations 
governing CRSs, 14 CFR Part 255, because, if CRS firms were 
unregulated, they could use the systems to injure airline competition 
and deny consumers and travel agents access to accurate and complete 
information on airline services. We recently began a proceeding to 
reexamine our regulations to see whether they are still necessary and, 
if so, whether they should be changed, by publishing an advance notice 
of proposed rulemaking. 62 FR 47606, September 10, 1997. The comments 
and reply comments on that advance notice will be due on December 9, 
1997, and January 23, 1998, under the revised comment schedule 
established by us.
    We note that the rules will expire on December 31, 1997, unless we 
change the termination date. We are holding an expedited rulemaking 
proceeding to consider amending the rules' sunset provision so that the 
rules will remain in effect during our overall examination of them, as 
we noted in the advance notice, 62 FR at 47610-47611.
    The advance notice summarizes our findings in earlier proceedings 
on the need for CRS rules and lists a number of issues that parties 
should address in their comments. 62 FR at 47607, 47609-47610. Among 
other things, the advance notice describes our past findings that 
market forces do not discipline the prices and quality of service 
offered by systems to participating airlines (participating airlines 
are the airlines whose services are sold through a system). 62 FR at 
47608. See also 61 FR 42197, 42198, 42201-42202, August 14, 1996. 
Whether these findings are still valid is one of the issues that will 
be considered in our reexamination of the rules.
    After we published the advance notice, America West filed a 
petition for proposed rulemaking that asks up to adopt two rules to 
stop CRS practices that allegedly impose unreasonable costs on 
participating airlines. America West alleges that each system offers 
incentive programs to travel agencies that encourage travel agents to 
make unnecessary and abusive airline transactions. A travel agency 
typically pays a much lower fee (or no fee) for CRS services if it 
makes a certain number of booking transactions each month. According to 
America West, a travel agency may have an incentive to make 
illegitimate booking transactions because doing so will enable it to 
receive CRS services at lower cost, even though the agency's legitimate 
transactions are too few to make the agency eligible for the discounted 
fees. America West asserts that travel agencies also make illegitimate 
or unnecessary books transactions for other reasons. Whatever the 
reason, all booking transactions generally impose a booking fee 
liability on a participating airline.
    America West contends that, since each system uses a transactional 
methodology for calculating booking fees (the fees charged 
participating airlines), an airline must pay fees whenever travel 
agents conduct transactions involving its services, whether or not the 
transaction benefits the airline or results in the airline's carrying 
revenue passengers. According to America West, a participating airline 
like itself therefore must pay fees for many booking transactions that 
allegedly provide it no benefit. America West further asserts that the 
systems refuse to make any real effort to stop illegitimate travel 
agent transactions that create booking fee revenue for the systems. 
America West additionally charges that Sabre and Apollo, the two 
largest systems, each protects its major airline affiliate, 
respectively American and United, from similar abuses by denying travel 
agents the ability to conduct certain types of transactions that often 
lead to illegitimate bookings. America West alleges that the systems, 
however, have been unwilling to provide similar protection for 
participating airlines. Finally, America West alleges that the Internet 
has made matters worse, for the Internet booking sites created by 
travel agencies and other firms use a CRS as the booking engine.
    America West therefore asks us to adopt rules allowing systems to 
charge booking fees only for a transaction involving actual travel and 
requiring each system to deny its travel agency

[[Page 60196]]

users the ability to create a passive booking on an airline if that 
airline asks the system to terminate that capability (a passive booking 
is a booking transaction that is not sent to the airline's internal 
reservations system).
    We believe that the issues raised by America West's petition 
warrant further consideration. We are aware of complaints from other 
participating airlines raising similar concerns. Our advance notice of 
proposed rulemaking in Docket OST-97-2881 therefore included this among 
the specific issues that we asked commenters to address. 62 FR at 47610 
(para. 12). We thus intended to consider this issue in our overall 
reexamination of the rules.
    To facilitate our consideration of the issues presented by the 
America West petition, commenters should include their responses to the 
petition in their comments and reply comments on our advance notice of 
proposed rulemaking. America West itself is filing its petition as a 
response to the advance notice. Petition at 2, n. 2. Considering 
America West's proposals in that proceeding, Docket OST-97-2881, will 
be more efficient than considering them in a separate docket. 
Commenters therefore should not file comments on the petition in the 
docket for America West's petition.

    Issued in Washington, DC on October 31, 1997, under authority 
delegated by 49 CFR Sec. 1.56a(h)2.
Patrick V. Murphy,
Deputy Assistant Secretary for Aviation and International Affairs.
[FR Doc. 97-29467 Filed 11-6-97; 8:45 am]
BILLING CODE 4910-62-M